2016 (10) TMI 299 - AT - Central Excise

Appeal granted: Central excise duty demand overturned for manufacturing inputs received.

The Tribunal allowed the appeal, setting aside the demand for central excise duty on inputs received by the appellant for manufacturing machine parts. ... Demand of Central Excise Duty on inputs - pinion shaft and reck jaws - job work - inputs received on job work challan from factory of principal to appellant’s premises - whether the value of inputs needs to be included as inputs received were not for job work but for fitment in the final products? - Held that: - the central excise duty is paid on the entire value of the inputs along with final product despatched from the appellant’s factory premises. The decision in the case of INTERNATIONAL AUTO LTD. Versus COMMISSIONER OF CENTRAL EXCISE, BIHAR [2005 (3) TMI 132 - SUPREME COURT OF INDIA] relied upon where the issue of discharge of duty on the inputs supplied by the final product manufactured is settled in favour of the assessee - appeal allowed - decided in favor of appellant. Issues involved: Demand of central excise duty on pinion shaft and reck jaws inputs received by the appellant from another company for manufacturing machine parts.Analysis:1. Issue of central excise duty demand: The appellant received inputs under job work challan from another company to manufacture machine parts. The revenue claimed that the value of inputs should be included in the final product value. However, both lower authorities ruled against the appellant, confirming demands with penalties.2. Merits of the case: Upon review, it was found that the inputs were received under job work challan and fitted into the final product. The appellant, in good faith, did not include the input value in the final product value. It was established that the final product was consumed in a machinery on which appropriate duty had been paid.3. Legal precedent and decision: The Tribunal referenced the case of International Auto Ltd. 2005 (183) ELT 239 (SC) and the case of Saurabh Organics P. Ltd. 2012 (28) STR 321 to support the decision. The apex court's ruling in International Auto Ltd. directly addressed the issue, favoring the assessee. The Tribunal held that the case law cited by the Departmental Representative did not strengthen their position.4. Judgment: Considering the above factors, the Tribunal allowed the appeal and set aside the impugned order, ruling in favor of the appellant. The central excise duty was deemed to have been paid on the entire value of inputs along with the final product dispatched from the appellant's factory premises. The decision was based on legal precedents and the specific circumstances of the case.